Taking advance commissions in the insurance business..good idea or not?

Question

many people start by taking commissions on advance in order to fund their advertising/lead cost/overhead, etc., but it can become a real catch 22 because every time a customer cancels a policy, you incur a "chargeback." it is hard to recover from a few of those. on the other hand, taking commissions "as earned" is very little money in the beginning and difficult to build a business with. your opinions, please?

Answer 1

Until you get a book of business built up, you need to be careful with advanced commissions.  Not ALL of the money received is YOURS, until the end of the policy period.

You need to keep "company money" and "operating money" separate - especially in today's market of electronic sweeping of your trust account.  If you co-mingle funds, you can really get in trouble.  You need a mix - some "advance" and some "paid as earned" and you should do alright. Live on the "as earned" and be careful with the other.

Choose your customer base wisely and work those that tend to cancel early a little harder to keep them active.

Good luck and I hope this helps!

Answer 2

It is a tough business, that is for sure. Try to avoid drawing any more than necessary. I started as a broker in 97 and am now in my 4th bear mkt. I also sell insurance. It gets better, but sometimes it takes a lot of hard work and patience.

Good luck!

Answer 3

Take your advances but also put back some money for emergency fund. ( When you get a charge back it won't hurt as much because you have the fund to fall back on.)

You shouldn't have that many charge backs.  People know they need their insurance and so they try not to  cancel policy's.

Answer 4

it is very bad on your part to give commssion.as per my opponion you are not fit for this work,your are spoling the market too. had you know some buissnessman who is giving money from their own income.be smart.otherwise change job.